Dubai, UAE
Global construction industry growth pace to decline to 2.7 percent in 2019, said a latest report by GlobalData, a leading data and analytics provider.
“The deterioration in construction output growth across emerging markets has been worse than previously expected, particularly in the US and the Middle East. Therefore, the forecast for global construction output growth in 2019 has been revised down to 2.7 percent, which will be the slowest pace of growth in a decade,” GlobalData’s latest report, Global Construction Outlook to 2023 – Q3 2019 Update, said.
GlobalData’s central forecast sees global construction output growth increase to 3.2 percent in 2020 and then stabilise at 3.4 percent over the remainder of the forecast period, which runs to 2023. The report says, this is partly driven by a projected improvement in the global economy in 2020, which in turn relies on improvements in financial market sentiment and stabilization in some of the larger currently-troubled emerging markets.
Growth in the Middle East and Africa region as a whole will steadily improve over the forecast period, following a contraction in 2018 and a relatively lacklustre performance in 2019.
“Countries in the Gulf Cooperation Council (GCC) have suffered from weakness in oil prices in recent years, as government revenues have been greatly reduced. Assuming oil prices stay relatively high, large-scale investment in infrastructure projects – mostly related to transport – will be a key driving force behind the growth in the region,” the report said.
“However, the construction booms in a number of markets appear to have run their course. The pace of growth in sub-Saharan Africa will be particularly strong, averaging 6.0 percent a year in 2019–2023. There will be a steady acceleration in construction activity in Nigeria, supported by government efforts to revitalize the economy by focusing on developing the country’s infrastructure. Ethiopia will be Africa’s star performer, with its construction industry continuing to improve in line with the country’s economic expansion, but the pace of expansion will ease back to single-digits.”
Danny Richards, Lead Economist at GlobalData, comments: “Some major advanced economies have struggled to generate growth momentum, including the US, the UK and Australia. In China, where the authorities are stepping up investment in infrastructure to prevent a continued slowdown, growth will remain positive, contributing to a slight acceleration in growth in total output in the emerging markets.
“Geopolitical risks are intensifying, which could potentially undermine investor confidence and disrupt capital flows in the early part of the forecast period. Risks to the overall forecast stem primarily from a possible escalation in the trade war between the US and China, as well as inflamed tensions between the US and Iran following the recent drone strikes on Saudi Arabia’s largest oil processing center, which were blamed on Iran.
“The emerging markets of South-East Asia will invest heavily in new infrastructure projects, supported by private investment, and this region will be the fastest growing, expanding by 6.4% between 2019 and 2023.”
